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So it’s been awhile since I’ve done one of these, mostly because I still can’t find an easy way to dynamically display my portfolio online. So for now I’m back to taking screenshots of the spreadsheet I use to track it.

About two weeks ago, for the first time this year, my portfolio went from the red to the black, and I finally showed a profit! My portfolio currently has a gain of 3.63%, compared to -5.59% for the S&P 500. I am very happy to be outperforming that index by over 9 points.

The big winner this year has been Cleveland-Cliffs (CLF), up an amazing 88% since I bought it in mid-December. This kind of performance in a bull market would be exceptional, but seeing this growth from the past four months is amazing. Commodities are very hot right now (and have yet to show any slowdown), and CLF is really leading the way.

I am also very happy with Google (GOOG), which I talked about in a post a few weeks back. It trounced earnings estimates after the unnecessary, fear driven sell-off. I do hope it can keep up the momentum it got from that. My company doesn’t really believe in investing in “last year’s” bull market leaders, which is my only hesitation with holding GOOG.

Two of my other energy stocks - SandRidge (SD) and Helmerich & Payne (HP) are performing decently. It’s pretty funny how I discovered SD - I was watching a somewhat entertaining show called Wall Street Warriors, in which a money manager is heavily investing in Sandisk. Curious as to how the stock ended up performing, I entered “SD” expecting that to be Sandisk, but instead found SandRidge, and immediately noticed how strong the chart looked. So I bought it, and it’s returned 24% since. Not bad for a stock I stumbled upon!

Two of my recent additions - VMWare (VMW) and Immersion Corporation (IMMR) are both down a bit. I’m not too worried about VMWare, but I’ll need to take another look at IMMR (a touch-screen technology company) if it drops much further.

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My wife and I married at 22, about three months out of college. A lease started on our new apartment in Philadelphia literally three days after our wedding, so we had a brief honeymoon in Rockport, Massachusetts (just a thirty minute drive north from our wedding!). For the next two and a half years I was in graduate school, paying for it from my day job to avoid a loan, and at the same time starting to pay my undergraduate loan. So vacation wasn’t exactly an option, though we did manage to get to a few family get-togethers.

So now we’re about 26 years old, and with discussions of starting our own family taking place, we decided that it was really about time we take a vacation together - before it’s too late!

About a month ago, I started looking at vacations in the Caribbean. We had never been anywhere tropical, so we figured it’d be a great place to go. Aruba sounded like a perfect destination, until I made the discovery that fares from Boston rarely got below $400 per person. Next I see that hotels average around $300 a night, and that most people spend over $100 for dinner! Adding all this up, along with the miscellaneous fees and spending money for excursions, and we were looking at well over $2500.

I scoured the deal sites that everyone recommended to me, but either they were too strict in their dates, or the “deal” evaporated when you read the fine print (or reviews for the resort).

I had nearly given up hope when last week, I was browsing through Farecast when I saw a small inconspicuous link which said “Deals from Boston”, and below that “SFO for $220.” SFO? As in, San Francisco? As in, a coast-to-coast flight for about $200? Say it ain’t so!

In a frenzy of instant messages my wife and I tried to decide whether to jump on this or not. Of course, while we were doing this, the flight doubled in price back to the standard fare, and I felt crushed. I swore if I ever saw an opportunity like this again, I would just jump on it.

So when the same fare reappeared three days later, I did. I sent a message to my wife - “We’re going to San Francisco in 7 days” - and bought the tickets. Yes, this flight was indeed for the next weekend, or six days from today. I am rarely this impulsive, but after a month of frustratingly searching for the perfect vacation, I wasn’t going to miss my chance.

Next I started looking for hotels. They were quite expensive, with even one or two star hotels averaging over $200. I looked at places outside of the city, but San Francisco is very friendly to walkers, and I didn’t necessarily want to have to drive into the city every day.

So I couldn’t believe it when I saw the Omni Hotel (a four star luxury hotel rated the #3 luxury hotel in the U.S. by TripAdvisor) had a deal for $185 per night through Expedia - about one quarter of their normal nightly rate! I have no clue what caused this deal, but I thought the opportunity to stay in a luxury hotel for less than $200 per night (compared to their standard rate of $699 per night) was too good to pass up.

We’re both very excited about this vacation, but I have to admit that it took a lot of effort for us to spend money on it. See, when it comes to quality, long lasting purchases (like the couches we bought recently, or a new computer), I am able to justify these purchases to myself. Sure, leather couches may cost $2000, but they will last at least five years, and are something we use every single day. In the end, we’re spending about one dollar per day for those.

Compare that to a vacation which might cost $2000 for four days, and we’re instead spending $500 per day, or 500 times the amount of those couches! Of course, sitting at home watching a movie on those couches will not be nearly as thrilling as walking through Muir Woods or taking a cable car to Chinatown. But at least from a financial standpoint, it’s very hard to weigh those two things against each other.

Still, I don’t regret it. We have been married three and a half years, and deserve a vacation together, and I think that we aren’t being nearly as extravagant as we could be with it.

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At the investment company I work for, their general approach to earnings is not to play them either way. Overall, I think this makes a lot of sense, because it often seems like a risky move to buy or sell a stock before it announces earnings in hope that it will move one way or the other.

So I really had to be sure before I spoke up on Wednesday’s stock meeting about Google. I should preface this by saying that even though I have been very happy with my portfolios (both real and paper) in the past year, and feel as though I have learned quite a lot in the past year and a half, I still am very nervous whenever I speak up at this meetings. Combined, these people have a century (or more) of knowledge about the stock market, bachelors and masters degrees in finance, and to top it all off are just extremely intelligent people. I think they invited me to this meeting last year both to encourage my interest in investments as well as get a “fresh” opinion on things - even if that opinion was based on a few months of investment experience.

Anyway, about a month ago, Google’s stock got hit when ComScore, who is kind of like the Nielsen ratings of the internet, announced that its growth from online advertising sales was slowing drastically. I immediately put 10% of my portfolio in the stock, for three reasons. First of all, ComScore is notoriously inaccurate. I had actually researched the stock last year as a possible investment, before reading too many stories about how their calls were often way off. Second, by spending a lot of time in the online advertisement industry, I can see first hand how Google’s online advertisements are continuing to grow.

Last, I feel as though Google is one of the best overall companies I have seen in my lifetime. It is well run, has a great business model, and puts out incredible products. I never got a chance to buy into Google last year, so I felt as though buying it nearly 375 points off it high was a great deal.

So at this meeting Wednesday, I said that I strongly felt that the next day, Google would beat earnings estimate and everyone who sold off in fear the month before would dive back in.

And, incredibly, I was right. Google opened this morning up 80 points, or nearly 20%.

I feel really, really good. I know that, like all investing, there was a good amount of luck in this. But I feel as though this was a great example of how you can really benefit from investing when you understand not only a company, but the company’s stock as well.

My only regret was not purchasing ten real-money shares on Wednesday like I was tempted to. If I had done that, I would have gained about $800 overnight.

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As many of you know, my full time job is as a web content manager. So besides the multitude of personal finance sites I have in Google Reader, there are also an equal number of web design sites. One of these sites today posted a list (a list!) of the top 25 colorful websites.

So what does all this have to do with personal finance? Well, one of the sites that intrigued me is called Bookkeeping-in-a-Box. I at first thought it was some type of software-on-demand, like Mint.com, for managing personal finances.

Boy was I mistaken.

The site promotes management of personal (and business), which is good. It does this by basically selling a $150 plastic box, which is bad. Of course, it’s described as a “system.” I have read a vast array of systems for managing personal finance, covering nearly every facet you could think of. Yet I never read anything about the fairly straightforward process of, well, putting papers into folders.

I did a double-take at this point, thinking that maybe the picture of the plastic box with file folders was a physical representation for a complex digital repository that would store your latest auto insurance policy.

Nope. That is the actual box you are paying $150 for, that costs $20 at Staples, and is still a rip-off at that point.

Ok, so I am being a bit unfair at this point, because I am not covering what the true value of this product is supposed to be, which is the “system.” Maybe I am giving the general populous too much credit here, but do we really need a system to place pieces of papers into their corresponding folders?

According to the FAQ though, it does much more of that. Apparently it will help you with applying for and securing a loan, and even eliminate overdraft charges.

Here is my system. I’ll even be generous and give it away for free: Buy the cheapest box and file folder you can find. Write labels for major financial area in your life (insurance, auto, utilities, loans, etc). When you get a new document relating to one of those folders, put it in the folder. Get every statement you can delivered electronically – they are just as valid and save paper.

But of course, my system doesn’t come with rubber bands.

I wrote this entry for fun, and it’s probably a result of watching too many Daria reruns. I’m sure this system works well for some people. I just thought I would poke fun at something that asks you to spend an egregious amount of money to help you … save money.

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There’s a classic saying that you should never discuss politics, religion, and sex at the dinner table. After nearly a year of investment blogging, I’m of the mindset that market timing should be added to that list as well.

When I began studying investing, two of the first books I read (on the recommendation of personal finance blogs) were A Random Walk Down Wall Street and The Little Book of Common Sense Investing. They were both well written books that did a very good job introducing investing to me. They both also shared a common philosophy: It’s a fool’s errand to try to beat the stock market. Give up now and try your best to mimic it.

Most conservative investors push two main concepts: First is to never buy individual stocks, and second is to never try to time the market. I have written about both here, but it’s the second I would like to focus on in this post, spurred on by an article in the Wall Street Journal today entitled Stocks Tarnished by Lost Decade. In brief, the article says that money invested in an index fund nine years would be in nearly the exact same place today, even less when taking into account inflation.

Supporters of the buy and hold philosophy like to say that market timing is risky. It’s funny, because I think the exact opposite: Staying in your investments no matter what is happening in the market seems ludicrous! I’m in the middle of a book called How I Made $2,000,000 in the Stock Market by Nicolas Darvas, and he has a great little paragraph on this:

I work at an investment advisory service that practices market timing. For nearly four decades they have beat all the market averages. In late 2007, they advised moving heavily in cash, and are now doing almost three times better than the S&P 500, and four times better than the Nasdaq.

Yesterday, I went down to the archives room and leafed through their monthly newsletters from 1987. As each month passed, they advised moving more and more money out of the market – right in the middle of a massive bull market. Three days before Black Monday, their headline was “REMAIN IN THE STORM CELLAR.” Buy and hold investors watched their profits from the past year completely wiped out three days later.

The most often quoted “fact” I hear about buy and hold is that if you missed the best X days in the market, your portfolio would be down X percent. This is an argument chock full of holes, such as:

• Missing the worst ten days would have profited you three times as much as missing the best days (source)
• Most of the best days are followed by the worst declines, wiping out those huge numbers (source)
• All but two of the “best” days occurred in the 2000-2002 bear market (source)

Next these arguments are followed up by a slew of quotes from famous investors. Of course, there are just as many famous buy and hold investors as there are market timing investors, so it’s a logical fallacy to cherry pick the quotes that agree with one side of the other. But let’s take a look at one of the most famous and successful investors of all time, Warren Buffett, on market timing:

Part of the “problem” with market timing is that there is an actual strategy to it. The buy and hold strategy is simple. Market timing can be incredibly complex, so it is important to follow a system that works – or follow an analyst who uses a good system.

Unfortunately, due to both credibility and privacy issues, I cannot say the name of the service I work for. But there are services such as Hulbert which monitor the performance of investment advisory services, many of which practice market timing.

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My wife and I started living together back in junior year of college, before we were married (oh don’t worry, her father is a minister and even he was fine with it). We soon began to discover our different approaches to money. My father, a divorce lawyer, claims that money is the number one reasons he sees couples split, so I was a bit concerned about how this would play out in our relationship.

Seven years later, and I can say that besides the occasional squabble about video games (me) or shoes (her), we both have nearly the same approach to money. So that’s never been the problem. Figuring out exactly how to handle the money, though, has proven to be a bit more challenging.

See, I like paying bills. Actually, I love it. I look forward to the end of the month because, in part, I get to pay all my bills. I usually load up Quicken at least once a day, hit the update button, and anxiously await news on my finances. I have never, in my life, paid a bill late, so I also trust myself more than anyone to get the bills paid on time.

Of course, things would be a bit unbalanced if I paid all of the bills with us both pulling in bi-weekly paychecks. So what we’ve done in the past is listed all our shared expenses, subtracted that from our combined net income, and ended up with a “spending” amount both of us could have at the end of the month. My wife would then transfer over a certain amount of money to my account which would result in us both having the same amount of money.

Or at least, that was the plan. Unfortunately, our bills varied quite a bit month to month. No sooner would I adjust for higher heating costs in the winter, before we would then start paying higher gas bills for vacations in the summer.

Another big problem was differentiating necessary expenses from … not so necessary expenses. I always liked to keep a float of $2000 in my account, so I never really knew how much an effect buying Call of Duty or those nice Calvin Klein pants had, as it was all lumped together on the same credit card as our electricity bill and grocery shopping.

So, inspired by a comment on another personal finance site, we decided on another approach to splitting our finances. We currently have three checking accounts and one savings account, all at HSBC Direct (with two local checking as well for the necessity of paper checks).

Without further ado: the flowchart please!

Throughout the month, we both will be using the same credit card to make our necessary expenditures, such as groceries and gas. Any personal spending, such as clothes, restaurants, movies, etc, will be done instead with our individual credit cards. We put together a spreadsheet listing what we consider to be necessary expenses, along with their costs, so that only those end up on that card. Every two weeks, our paychecks will be directly deposited into our main checking account, the expense account.

At the end of the month, I will begin by paying our bills, as well as the expense credit card. Next, I will send my monthly check to my father for my college loan ($14k and counting, by the way, which I am looking at having paid off in less than two years!). After that, I will transfer a set amount into savings. And lastly, I will transfer a set amount into our individual checking accounts.

From our individual, “spending” accounts we will each pay our credit card. Depending on how much we have in our accounts, we can move money into savings.

We’re both excited about this new approach to handling our finances. I think that paying our expenses from our combined incomes will make us both feel better, instead of my wife feeling like she was paying me. I am also really looking forward to having necessary expenses and voluntary expenditures clearly delineated, so I can keep track of whether I’m going overboard buying Xbox 360 games.

It will require a bit more bookkeeping, but hey, I like doing that anyway. Having to use different credit cards will take some getting used to, but it will also have the side benefit of getting more cash back deals, since I always max those out on my main card.

What is everyone else’s experience with splitting finances?

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Interest repayments on your credit cards weighing you down? The Thrifty Scot can help

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Today I made a transfer of $263 from my checking account to our emergency savings account, “officially” topping it out. We have saved four months worth of living expenses into that account. We decided on four months due to the fact that we are both working, and I feel strongly about my job security.

It took just over one year to accomplish this, starting with savings of just about one month. And for half of the past year my wife was not working (and not spending a dime either), so all in all I am very pleased at our accomplishment. This goal also comes a month after the expenses of moving (paying movers, paying double rent) as well as buying new leather couches (yes, you can spend and save at the same time!).

So … now what? It is a great feeling, to know that I can start saving for all of our other goals, but also a challenging one in that now I have to think of the best way to split money we put towards savings. Before, it was any money left over from our expenditures that got dumped into the emergency savings.

The biggest challenge, as always, is the fact that about twenty percent of my salary comes in the form of quarterly bonuses. So while I can still take a certain amount of money each month and set it aside for savings, that amount pales in comparison to what I can save each quarter from bonuses.

Currently, we have three main savings goals:

• A House:

We would like to be ready to purchase a house as soon as possible. Considering the fact that the median house price north of Boston is $450,000, this will be a few years. We do have a generous gift of part of a down payment from my wife’s parents, but will still need to save a large amount of money ourselves.

• A Baby:

At some point in the next couple years, we would like to have a baby. From what I could find, a baby costs about $10,000 in the first year. We would like to save at least several thousand dollars towards this to help lessen the strain on our monthly expenses.

• Retirement:

I am 25, and I know I could wait another five years before saving for retirement and still come out ok, but I also know that starting at least some type of savings now would help immensely.

At the end of the month, I will be opening another savings account at HSBC. This will be a long-term savings account, at this point focused towards our down payment, that we will never, ever touch. For baby savings, I figure we can add to the emergency savings account (which I should probably rename), and just make sure when we withdraw for baby expenditures to never go below our emergency amount. For the IRA, I will save $2,500 in my checking account. Once I reach that point I will open a Roth IRA at Zecco (I can buy and sell stocks, funds, etc at that point for free, minus a fee of $30/year).

All in all, it’s exciting, if not somewhat overwhelming. We were to want to save 10% for the downpayment of a house over the next two years, we would have to save nearly $2000 a month for that alone!

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After quite a bit of searching, I finally found a portfolio widget that looks like it will serve my purpose. I have placed it on the sidebar and will keep it updated whenever I make changes to my portfolio.

I should mention that the amount it shows me up (or down) is not entirely accurate as it is based off of my current holdings, not losses I took from sales at the beginning of the year. Unfortunately, I can’t get it to take into account those losses for some reason.

Also, the actual amount of money is multiplied by a certain amount, as I like to avoid disclosing specific numbers on this site. Believe me, I wish I had $100,000 to invest!

So let’s take a quick look at what I dare to invest in with the current market:

• Yamana Gold (AUY): It’s a gold stock, and gold has been going strong for a year now. I can’t say I know much of the differences between the various gold stocks, but this one has been highly recommended for months now and does seem to be one of the leaders of the gold pack.
• Cleveland-Cliffs (CLF): A resource stock that has really taken off in the past month. I am a bit worried at just how much it’s gone up recently, actually, and wouldn’t be surprised to see a pullback at some point.
• Google (GOOG): I never got a chance to get into this stock last year – I swear it was high above its moving average the whole time – but after a sharp drop due to bad pay-per-click news, I jumped in. I often hear that leaders from the last bull market won’t be leaders in the new one, but I still feel as though Google is just as good of a company as it was at $700, and that it will be making its way back up there.
• Arena Resources (ARD): Another resource stock, that I honestly do not know that much about. This one was mainly picked based on a recommendation.
• Cosan Limited (CZZ): A major sugar company based in Brazil. They produce ethanol from sugar (which is a much more efficient process than taking it from corn), so this is a green play with agriculture for some support.
• SandRidge Energy (SD): Yet another resource company, this one focused on natural gas. It only went public back in November, so it’s a bit newer than most out there. Supported by a strong management team.
• Patriot Coal (PCX): Because, you know, I didn’t have enough resource stocks. PCX is a recent spinoff of Peabody Energy (BTU). Coal is still in as much demand as ever, and this stock is also supported by a strong management team.

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A few days ago in the coffee room at work, people were discussing what temperature they kept their houses at. Not surprisingly, the answers were all over the place. One young woman, who has a two year old at home, keeps her house at 72. Another kept her house at 70 but said it probably averaged 65 because of the drafts.

And yet there were several people who kept their house between 60 and 65.No doubt they were saving a fair chunk of change each month. For me, it would take some extenuating circumstances to force my thermostat below 66!

To be honest, I did have a slight hesitation about this in our new place. Not only do we have more square footage (about 2/3 more than our old place), but we also have a loft, and live on the third floor. I wear sweaters when at home, and almost always have a blanket on when watching TV or reading, but the second my nose or hands start getting cold is when the heat goes up. Generally, I’ve found 68 to be a very comfortable temperature.

Last month we bought an oil-filled radiator as our landlord told us the oil was running out. I was planning on returning it after the move, but I realized that keeping it in our bedroom and setting the rest of the house to 58 could possibly afford us some savings.

How much does it cost me to be comfortable in my own home? $10 a month? $20? Even $40? If the difference between 65 and 68 was a few hundred dollars a month, I might start to reconsider. But for anything less, I think I’ll remain comfortable.

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Some personal loans come with nasty catches like early redemption penalties. Find out how you can avoid these with help from The Thrifty Scot

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Just a quick note that number 141 of the Carnival of Personal Finance is up over at Broke Grad Student (I can identify with that!). My article, Five Advantages and Disadvantages to Online Banking, was one of the featured articles, so thanks!

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